Innovation in the U.S.

Anita JonesUniversity of Virginia

September, 2007

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Outline

How do we know if there is a problem?

Gathering Storm recommendationsAmerica Competes Act implementation

The energy challenge

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Assessing the Nation’s Future Competitiveness

Preserving and enhancing the quality of life for our children depends upon continued increases in productivity

Prowess in engineering & science is a major underpinning for the innovation that leads to productivity

Compete effectively or decline!

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U.S. Innovation – How Do We Know if There is a Problem?

Capability evolves – over years, decades

No single determinant

Hard to predict

Constant changes

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What matters?

Globalization increases the interdependence of economies competition

Educated engineers, scientists, & managers available

A nation can establish a leadFor example, the Celtic Tiger, Ireland

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U.S. Innovation – Telltales

Ribbon on line of sailboat

Hint or indication

Measure of “now”

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Telltale Sources:

Gathering Storm reportTestimony of Norm AugustineVarious news articles

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Telltale

U.S. trade balance: in 1990 – plus $54 billion in 2001 – negative $50 billion

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Telltale

New jobs created recently: low wage – 44% high wage – 29%

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Telltale

Cost of healthcare exceeds: Starbucks – exceeds cost of coffee General Motors – exceeds cost of steel

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Telltale

Transfer of business: US airlines outsource aircraft

maintenance to China & El Salvador IBM sold its personal computer unit

to Lenovo in China

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Telltale

Ford & GM both have junk bond ratingsToyota has 8 times the market capitalization

of Ford & GM combinedDaimler (German) bought Chrysler; now

they don’t want it

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Telltale

U.S. investors put more new money into foreign stock funds than inU.S. funds

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Telltale

77% of the new research & developmentlaboratories to be built will be in India and China

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Telltale

Gathering Storm recommendations “cost”$9 billion (over some years)

U. S. citizens gambled $7 billion on the last Super Bowl

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Telltale

U. S. firms spent more on litigation thanon research & development

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Telltale

Cost of a factory worker in America isnine times that in Mexico

Cost of a young professional engineer inAmerica is eight times that in India

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Telltale

U.S. ranks 12th among OECD countries innumber of broadband connectionsper 100 inhabitants

Broadband service in Japan is eight to 30 times faster than in the U.S. & much less expensive

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Telltale

In 2004, China overtook the U.S. to become the leading exporter of information technology products

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Telltale

Standardized tests of U. S. children showedmoderate improvement in lower grades& further deterioration in the 12th grade

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Telltale

U. S. children spend more time watchingtelevision than in the classroom

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Telltale

U. S. university engineering enrollment remains flat

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Telltale

Measure of “now”, not of the future

Sources of “telltales”:Gathering Storm reportTestimony of Norm AugustineVarious news articles

Gathering Storm Report

4 recommendations20 implementation actions21 months later

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Gathering Storm report

National Academies – informed debate Much congressional applause Much political talk Still 21 months later Authorization bill through conference

COMPETES – America Creating Opportunities to Meaningfully Promote Excellence in Technology, Education and Science Act

Appropriation still in the future

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Ten Thousand Teachers, Ten Million Minds

Recruit 10,000 teachers, educate 10 million minds: Attract bright students through competitive 4-yr. merit-based scholarships for BS in sciences, engineering, or math with concurrent K-12 science & math teacher certification in exchange for 5 years public service teaching in K-12 public schools

Strengthen 250,000 current teachers’ skills: Summer institutes, Master’s program, AP/IB (Advanced Placement/International Baccalaureate) training

Enlarge the Pipeline: Create opportunities and financial incentives for pre-AP/IB and AP/IB science & math courses

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Sowing the Seeds

Increase federal investment in basic research—10%/year over next 7 years focusing on physical sciences, engineering, mathematics & information sciences. Double budget at NIST, NSF and DoE Office of Science (7-10 years)

Provide early-career researcher grants—200 grants at $100,000/year over 5 years to best researchers

Institute National Coordination Office for Research Infrastructure—$500 million/year over 5 years

Catalyze high-risk, high-payoff research—technical program managers allocate 8% federal research agency budgets for discretionary spending

Institute Presidential Innovation Award—identify and recognize persons who develop unique scientific and engineering innovations at the time they occur

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Best and Brightest Increase number of US citizens earning science,

engineering, and math degrees: 25,000 new 4-year undergraduate scholarships per year 5,000 new portable graduate fellowships per year

Encourage continuing education of current scientists and engineers: Federal tax credits to employers

International students and scholars Less complex visa processing and extensions New PhDs in S&E: 1-year automatic extension and (if

find job) automatic work permit and expedited residency status

Skills-based, preferential immigration points system to prioritize US citizenship; Increase H1B visas by 10,000

Reform "deemed exports" policy: Allow access to information and research equipment except those under national security regulations

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Incentives for Innovation

Enhance Intellectual Property protection, while allowing research Sufficient resources for Patent & Trademark Off. Institute “first-inventor-to-file" system and

administrative review after patent granted Shield research uses of patented inventions

from infringement liability Change IP laws that impact industries differently

Increase Research & Experimentation tax credit from 20 to 40% of qualifying increase

Incentivize long-term investment in innovation by industry

Provide affordable broadband access -broadly

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ARPA-E

Focus on creative out-of-the-box transformational energy research that industry by itself cannot or will not support

High risk, but potentially dramatic benefits to nation Address environment, energy, and security Based on DARPA Model—lean, agile, independent with

ability to start and stop programs based on performance Research not performed by agency, but universities, start-

ups, established firms, labs Staff turn over every 4 years; performance assessments Spin-off benefits expected include education of next

generation of researchers Report to DOE Undersecretary of Science

Energy Challenge

Make the U.S. self-sufficient in energy

Energy Challenge

UrgentBig business – affects the economyPolitical

Wish/want

… a family term

A lot of political “wish/want”s

Wish/want

Political wish/wants: hydrogen economy – White House ethanol economy – corn farmers nuclear economy – nobody

(except maybe you?)

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Critical to national choices

What is technologically possible?

What makes economic sense – to industry – for deployment?

What is consistent with the Second Law of Thermodynamics?

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Supply104

Quads

U.S. Energy Flow, 2005 (Quads - BTUs)U.S. Energy Flow, 2005 (Quads - BTUs)

Domestic67%

Imports33%

Residential

Commerical

Industrial

Transportation

Consume100

Quads

Nuclear 8%Renewable 6%

Fossil86%

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Electricity Flow, 2005 (Quads)Electricity Flow, 2005 (Quads)

Coal

Gas

ConversionLosses

Nuclear

Renewable

EnergyConsumedToGenerateElectricity

NetGeneration

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Construction Permits for Construction Permits for U.S. Power Nuclear ReactorsU.S. Power Nuclear Reactors

8.23 Quads produced by 104 U.S. nuclear power plants8.23 Quads produced by 104 U.S. nuclear power plants

Units Ordered

Construction Permits Issued

Full-power Operating Licenses

Operable Units

Shutdowns

0

50

100

150

200

250

300

Num

ber o

f Uni

ts

1955 1960 1965 1970 1975 1980 1985 1990 1995 2000

Year

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Source of Graphs

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Innovation in Energy

Determined by confluence ofWhat is technically feasibleWhat is reduced to practiceWise regulation

• Including wise taxationInfrastructure that industry deploys

Mostly by, enlightened citizens!

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The end